Late on Friday (last week) Petra Diamonds said Chief Executive Officer Richard Duffy purchased approx GBP51,200 in shares in a transaction at 21.35p a share. Earlier in the week, Goldman Sachs issued a broker note on PDL upgrading their recommendation to ‘BUY’ and increasing the target to 32p a share.
It’s not unusual to see directors buying in the open market, but in Petra’s case Mr Duffy’s purchase perhaps carries a little more weight as it’s his first purchase and one that has been made ‘after’ he has had 4 months to review the business since joining in mid Feb 2019.
Mr Duffy is no spring chicken. He was previously chief financial officer and head of African operations at AngloGold Ashanti. He’s very well respected in the City. So the message from Mr Duffy is a strong one indeed.
Upon his appointment, Petra’s chairman, Adonis Pouroulis, said, “Mr Duffy will be critical to drive Petra’s transition from a phase of intensive capital expenditure and expansion to a focus on steady-state, cash-generative operation.”
Mr Duffy’s challenge is to get Petra’s $550m (approx) NET debt pile down. The first half of 2019 has seen a continuation of capital injections into the business which has been ongoing for sometime now. However, this intensive capex period is set to change with the bulk of investment completed. The second half of 2019 should see Petra generating significant cash flows which should enable sizable chunks of debt to be paid down. The market is understandably taking a cautious view to-date with PDL’s share price near all time lows. But Mr Duffy’s recent purchase might be seen by some as a message to all the doubters out there that the company is indeed on the recovery path to solid growth. If anyone knows the business… it would be him.
Petra Diamonds is part of TheShareHUB top ten picks for 2019. Please read all risk warnings (see the sidebar). PDL current price 22.7p.